Does Spatial Heterogeneity Matter in the EU Regions’ Convergence Income Process?
Does Spatial Heterogeneity Matter in the EU Regions’ Convergence Income Process?

Summary/Abstract: This paper explores the role spatial heterogeneity in the EU regions’ convergence income process. For this purpose we tested income convergence hypothesis of the 245 NUTS 2 European Union regions during the period 2003 – 2014. We used spatial econometric approach which allowed an explicit modelling of both spatial effects: spatial heterogeneity and spatial autocorrelation. Our results showed an appropriate consideration of the role of spatial effects. First, we found that the rate of economic growth in the region is not only affected by the exogenous characteristics of the region, but also potentially by the rate of economic growth in neighbouring regions. Secondly, estimated spatial regime model identified two spatial regimes – convergence clubs. The regions under the first spatial convergence regime included economically „weaker” regions (mainly regions of post-socialist countries, regions of Portugal, Spain, Greece and southern regions of Italy) and these regions are converging separately from the rest of regions of the EU.

• Details
• Contents